Seven formerly competitive Los Angeles area hospital groups are partnering with Anthem Blue Cross, with which the hospital groups have also battled, to share profits and losses.
The hospital groups began studying how to work together three years ago in anticipation of the Health Care Accountability Act, according to Anthem Blue Cross Western Region President Pam Kehaly.
Kehaly and the CEOs of the seven hospital groups, including Torrance Memorial’s Craig Leach, announced the “integrated health system” partnership Wednesday during a press conference at the Westin LAX Hotel.
Participating in the press conference, alongside Kehaly and Leach, were CEOs from UCLA Health Systems, Good Samaritan Hospital, Cedars-Sinai Hospital, Huntington Memorial Hospital, MemorialCare Health Systems (including Long Beach and Orange County Memorial hospitals and Miller Children’s and Women’s Hospitals) and PiH Health hospitals (in Whittier and Downey).
In recent years, medical costs have outpaced inflation by 500 percent, resulting in hospitals complaining they weren’t being adequately compensated by the insurance companies, who, in turn, complained they were being over billed for hospital services.
Kehaly said the new partnership, to be called Anthem Blue Cross Vivity, will resolve this conflict by enabling the hospital groups and Anthem to share Vivity’s profits and losses. Both parties will benefit by keeping patients healthy and out of the hospital, she said. Patients’ records will also be shared among the participants, which will reduce redundant medical services, she said.
The business plan resembles Kaiser Permanente’s and is priced to compete with it. Kaiser is the state’s largest medical insurer, with 40 percent of the market. Anthem is second with 23 percent.
A major advantage of Vivity, Kehaly, said, is that its members will be able to choose from among any of its group’s highly ranked, 14 hospitals and their affiliated doctors groups.
Leach said Torrance Memorialhas approximately 40,000 managed care patients. Vivity patients in need of services that Torrance Memorial can’t provide will have streamlined access to other Vivity hospital services, he said.
“This is a whole different model. Never before have a group of competing hospitals and an insurance group shared the financial risk of caring for patients,” Leach said.
To guard against member hospitals undertreating patients, he said, they will be required to meet quality standards.
“We may never see a Vivity patient in our hospital. But we will be responsible for them having mammograms and colonoscopies when they are supposed to, which will result in better health,” Leach said.
He said one of Vivity’s appeals to Torrance Memorial is that it will enable Torrance Memorial to attract large South Bay employers whose workers live throughout Los Angeles and Orange counties and want medical services close to their homes, rather than their workplaces..
Vivity enrollment will be offered to employers with 50 or more employees beginning next month. Medical services will begin January 1. Leach said Torrance Memorial is making Vivity available to its 3,500 employees and PERS (California Public Employees Retirement System) is making Vivity available to its 220,000 Los Angeles and Orange county members.
As with other managed care plans, Vivity members will pay an annual premium and copayments for office visits, medical procedures and medicine. There will be no deductibles.
Anthem’s Kehaly said if Vivity is successful with large Los Angeles area employers, it will be offered to smaller employers and expanded to other markets. ER
